Containing health costs in the Americas

In recent years, a series of policy measures affecting both demand and supply components of health care have been adopted in different Latin American and Caribbean countries, as well as in Canada and the United States. In applying these measures various objectives have been pursued, among them: to mobilize additional resources to increase operating budgets; to reduce unnecessary utilization of health services and consumption of pharmaceuticals; to control increasing production costs; and to contain the escalation of health care expenditures. In terms of demand management, some countries have established cost-recovery programmes in an attempt to offset declining revenues. These measures have the potential to generate additional operating income in public facilities, particularly if charges are levied on hospital care. However, only scant information is available on the effects of user charges on demand, utilization, or unit costs. In terms of supply management, corrective measures have concentrated on limiting the quantity and the relative prices of different inputs and outputs. Hiring freezes, salary caps, limitations on new construction and equipment, use of drug lists, bulk procurement of medicines and vaccines, and budget ceilings are among the measures utilized to control production costs in the health sector. To moderate health care expenditures, various approaches have been followed to subject providers to 'financial discipline'. Among them, new reimbursement modalities such as prospective payment systems offer an array of incentives to modify medical practice. Cost-containment efforts have also spawned innovations in the organization and delivery of health services. Group plans have been established on the basis of prepaid premiums to provide directly much or all health care needs of affiliates and their families. The issue of intrasectorial co-ordination, particularly between ministries of health and social security institutions, has much relevance for cost containment. In various countries, large-scale reorganization processes have been undertaken to eliminate costly duplications of resources, personnel, and services that resulted from the multiplicity of providers in the public subsector. Given the pluralistic character of the region's health systems, an important challenge for policy-makers is to find ways to redefine the role of state intervention in health from the simple provision of services to one that involves the 'management' of health care in the entire sector.